White House Spokesman Disagrees That Iran Payment Was 'Leverage'

(Bloomberg) -- The White House acknowledged Monday that a $400 million cash payment to Iran in January was related to the release of three American captives, but spokesman Josh Earnest refused to agree with a State Department spokesman who called the money "leverage" in the talks.

“I have never made the case that this was somehow a coincidence," Earnest told reporters Monday, defending the Obama administration’s negotiations with the Islamic Republic. Earnest and President Barack Obama have denied that the payment was a ransom for the prisoners, and pressed by reporters, the spokesman offered an alternative characterization of the deal.

"The notion of a ransom, I think, is often perceived as paying money in exchange for the release of unjustly detained individuals," Earnest said. "That’s not what occurred here. What occurred here was a mutual prisoner release."

A State Department spokesman, John Kirby, said Thursday that the money was used as "leverage" to ensure the Americans’ release, sparking new charges from Republicans that the January payment -- announced at the time by the White House -- was effectively a ransom. Earnest refused to back Kirby’s description of the payment as leverage.

"That’s a word that I have not used," Earnest said.

Earnest, President Barack Obama and other administration officials have previously said that the payment was negotiated separately from discussions over the American captives. The resolution of both issues was announced on January 17. The discussions were concluded at about the same time because last year’s nuclear deal with Iran opened a new channel of communication between the Islamic Republic and the U.S., Obama said earlier this month.

"Our story and how we have described this agreement," Earnest said on Monday, "have not changed."

Used as ‘Leverage’

Republicans pounced after Kirby’s statement on Thursday that the payment and the release of the prisoners eventually became linked, with the former being used as “leverage” to ensure the latter. Kirby rejected accusations that the money was a ransom. Monday’s briefing at the White House was the first time Earnest has taken questions from the press since Kirby’s admission.

“The president and his administration have been misleading us since January about whether he ransomed the freedom of the Americans unjustly imprisoned in Iran,” House Speaker Paul Ryan said in a statement Friday. “The president owes the American people a full accounting of his actions and the dangerous precedent he has set.”

The Wall Street Journal has reported that the $400 million was delivered to Iran as cash aboard a cargo plane, and that the money wasn’t delivered until Iran released the American captives. The reports have added to criticism of the nuclear deal, which took effect hours before the cash payment and prisoner release.

The payment marked the resolution of a dispute over a weapons purchase by the government of Shah Mohammed Reza Pahlavi before he was ousted in 1979. The U.S. weapons were never delivered. The U.S. delivered $400 million of the $1.7 billion settlement the same day sanctions were lifted on Iran as part of the nuclear agreement. Hours earlier, Iran had released the prisoners, who included Washington Post reporter Jason Rezaian and scholar Matthew Trevithick. The U.S. also returned several prisoners to Iran.

Not ‘Ransom’

The administration has sought to downplay the reports, describing them as old news and saying the White House has been transparent about the payment since January.

“We do not pay ransom. We didn’t here. And we won’t in the future,” Obama said August 4 after a meeting with National Security officials at the Pentagon.

Asked on August 3 why the $400 million payment was made about the same time as the prisoner release, Earnest said it was because the Iranians were “eager” to get their money back. He did not say that the U.S. withheld the payment to gain leverage over the Iranians.

Challenged on whether he was as transparent as he could have been on August 3, Earnest said that "the reason they happened around the same time was because Iran was in the business of signing off on agreements." The U.S. was trying to get as much as it could out of the talks, he said, describing the result -- curtailing the Iranian nuclear program; settling the financial dispute; and recovering the captives -- as wins.

"Because of our success in completing those three different sets of negotiations, the American people benefited and our interests were advanced," Earnest said.

Asked four times during the August 3 briefing if the Americans would have been released without the payment, Earnest didn’t answer directly, saying only that negotiations about the settlement and the prisoners were taking place on separate tracks.

--With assistance from Nick Wadhams To contact the reporter on this story: Toluse Olorunnipa in Washington at tolorunnipa@bloomberg.net. To contact the editors responsible for this story: Craig Gordon at cgordon39@bloomberg.net, Alex Wayne, Kevin Whitelaw